With the rising market trends of both silicon metal and coking coal, what is the current situation of the silicon coal market? [SMM Analysis]

    With the continuous upward trend in the futures market prices of coking coal, a raw material for silicon coal, and the strong push for higher prices in the downstream silicon metal market, what is the trend in the silicon coal market? The following analysis is conducted from three aspects: price, cost, and supply and demand:

    I. Price: Largely stable

    As of July 15, silicon coal prices in major regions such as Xinjiang, Ningxia, Gansu, and Shaanxi have remained relatively stable, with specific prices in each region as follows:

    II. Cost: A slight increase in coking coal spot prices, but a weak driving force for silicon coal prices

    Starting from early June, the futures market prices of coking coal, a raw material, began to rise. As of July 15, the highest futures price had reached 928 yuan/mt, an increase of approximately 219 yuan/mt from the lowest point in early June. Despite the good performance of coking coal futures in the raw material market, the spot market has undergone three stages of changes during this period: from price drops to stabilization, and then to a slight increase. Currently, the overall increase is limited, with some coal processing plants raising prices by about 50 yuan/mt and others by about 30 yuan/mt, thus providing insufficient driving force for silicon coal prices.

    III. Supply and demand: Both show a slight increase

    Currently, most coal processing plants in various regions still arrange production plans based on order quantities and face no inventory pressure. Due to the recent upward trend in the silicon metal market and the resumption of operations at some silicon plants in south-west China during the rainy season, the demand for silicon coal, a raw material, has increased, leading to a simultaneous increase in the operating rates and production of coal processing plants.

    In summary, the overall silicon coal market is currently largely stable. For downstream silicon plants, there has been no recent change in the cost of silicon coal, a raw material. However, if the spot prices of coking coal, a raw material, generally increase in the future, there is an expectation that silicon coal prices will follow suit.

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